Analysis: Hawaii has the second highest income-tax burden in the U.S.



(The Center Square) – An analysis by the Hawaii Department of Taxation found that the Aloha State has the second highest income tax burden in the country behind Oregon.

A family of four making Hawaii’s median income of $88,005 would pay $5,086 a year in state income taxes, according to the analysis conducted by Seth Colby, a tax research planning officer with the department.

But it’s not just the middle class paying high state income taxes. Single filers in Hawaii making $500,000 a year pay more income taxes than the same filers in other states. Married couples who make more than $1 million a year also top the list of highest income taxes when compared to other states, according to the analysis.

“Hawaii has a progressive income tax schedule meaning that it starts low and increases with income,” Colby said in the study.

The high-income taxes contribute to the state’s high cost of living, according to Keli‘i Akina, president and CEO of the Grassroot Institute of Hawaii.

“This new information underscores how poorly Hawaii’s tax system stacks up against those of other states, and helps explain why our economy is performing so poorly relative to the nation,” Akina said.

Gov. Josh Green introduced the “Green Affordability Plan” earlier this year, focusing on several factors contributing to Hawaii’s high cost of living. He signed the first set of tax breaks last week.

House Bill 954 raises the size of the child and dependent care tax credit from $2,400 per individual to $10,000. The credit increases from $4,800 to $20,000 for two or more taxpayers. The bill also doubled the food excise tax credit from a minimum of $35 to $70 and a maximum of $220 from $110 and doubled the earned income tax credit. The bill provides more than $104 million to taxpayers in direct tax relief, the governor said.

“It’s too expensive to live in Hawaii for so many people,” Green said when signing the bill last week. “Over time, we would like to move more toward $250 million in tax breaks, that’s what phase two will look like but this is an excellent start.”

Akina said for the sake of future generations, the tax burden needs to be lightened.

“I am glad our lawmakers saw fit to give some tax relief this year, but I hope they will pass the remainder of the governor’s tax plan next year – as well as exempt medical services from the general excise tax,” Akina said.

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